401(k) Sponsors Increasing Focus on Investments

The Profit Sharing/401(k) Council of America (PSCA) found that half of plans that suspended their matching contribution in the last four years have fully restored it. Of all plans reported on, 66.7% have maintained their matching contribution, 12.1% increased their match or added a matching contribution, 7.3% have fully restored suspended or reduced matches and 13.9% still have suspended or reduced matching contributions.

PSCA contends that companies are focused on plan investments during this time of economic volatility: 63.8% of plans changed their investment lineup in the last year, and 56.2% changed their investments in 2010; up from 19.7% in 2009.

David Wray, president of PSCA, says this shift is “dramatic.” “That so many plans sponsors are reviewing and reworking their investment lineups demonstrates the importance they see in delivering the very best investment opportunity as part of the 401(k) plan benefit for their employees, especially in these unusual times,” he said.

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Companies continue to help their employees understand their plans and investments, according to PSCA’s survey, 401(k) and Profit Sharing Plan Response to Current Conditions. More than half of plans increased employee education efforts in 2011, and 43% provided education specifically on market volatility.

Eight percent of plans reported they added an automatic enrollment feature to their plan in the last year. Nearly one-quarter of plans monitor whether participants are on track for retirement, including more than 40% of large plans. Almost 40% of plans reported an increase in plan participation, up from just 3.9% in 2009.

The survey was conducted in October 2011 and includes responses from 523 401(k) and profit sharing plan sponsors from across the country.The full report is available here.